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Buck Mckeon's Big Job Scare Goes Bust

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It was probably the most ballyhooed congressional hearing on defense for the year. As the monthly economic news continued to show poor job growth, and as the elections heat up, the Republican chairman of the House Armed Services Committee, Cong. Buck McKeon (R-Calif.), and defense contractor Lockheed-Martin saw a major opportunity to protect the defense budget and their bottom lines. Something called the Worker Adjustment and Retraining Notification (WARN) Act was determined, by McKeon and Lockheed, to require notices of impending pink slips to tens, if not hundreds, of thousands of defense industry workers, and because of the McKeon/Lockheed interpretation of the WARN Act's 60-day advance notice requirement, the warnings would have to occur just a few days before the November elections

The only possible rescue from the predictable panic among politicians, especially Democrats, to save the jobs would be to undo the $55 billion in automatic cuts in the defense budget. Those are set to occur on January 2, as required by the Budget Control Act of 2011 and last year's failure of the congressional "Super Committee" to cut a broad budget deal; the much-dreaded automatic "sequester" against defense appropriations would need to be undone, according to McKeon and Lockheed. Just as the House of Representative was about to debate the 2013 Department of Defense Appropriations bill, McKeon scheduled his big hearing with Lockheed and other defense industry types on Wednesday last week.

Leaving nothing to chance, the day before the hearing, the defense manufacturers trotted out yet another study to say over a million jobs would be lost in defense and related work; former Vice President Richard Cheney was brought into Washington to chime in on how destructive the Pentagon budget cuts would be; Lockheed's testimony was leaked to the Washington Post to procure an article on the morning of the hearing to soften up any reluctant politicians, and press conferences, some of them featuring Democrats, peppered the political landscape.

All the usual hot rhetoric was rebroadcast in excess. To supplement Secretary of Defense Leon Panetta's memorable description of the sequester scenario as "doomsday," the president of the manufacturer's subsidiary, the Aerospace Industries Association's Marion Blakey, contributed "Armageddon" to the discourse about jobs to be lost. In describing his own hearing as "probably one of the most important hearings I can remember," HASC Chairman McKeon chimed in with "catastrophic" (another Panetta term) and a description of the Obama administration's concern about this impending tragedy as a "cavernous silence."

I fully expected these crude tactics to be effective and the Democrats at the hearing to be effectively stampeded into a clamoring for the sequester to be repealed with little to no concession from the Republicans.

I was quite wrong; from the McKeon/Lockheed perspective, the hearing was a complete bust.
The Democrats on the HASC didn't buy any of what McKeon and the manufacturers were putting down; actually, they made the hearing into an embarrassment to McKeon and his industry sidekicks, as McKeon's deflated and underwhelming comments at the very end of the hearing made painfully clear.

Despite repeated prompting, the Lockheed witness, CEO Robert Stevens, could not identify a single contract that would be terminated, nor any specific number of workers to be laid off. All he really had was more rhetoric: "devastating," "undermining the aerospace industrial base," and the obligatory parroting of Panetta with "catastrophic" and "meat axe." Not knowing what contracts would actually be affected or how, he was sure, however, he would need to get out those thousands and thousands of pink slip warnings just before the elections.

Another major witness, former Hill staffer, Pentagon manager and now EADS North America CEO Sean O'Keefe was not even sure of that. The closest he got to warning of pink slip notices was that EADS "will have to do something." He was clearly not entirely on board with Lockheed and McKeon. The president of Pratt and Whitney, David Hess, was even less helpful; he didn't really know what the law requires or what he would do; it was all "not clear." A small business contractor, Della Williams, president of Williams-Pyro in Fort Worth Texas, volunteered that her company was "not covered" by the WARN Act. Not exactly the clarion call McKeon and Lockheed wanted to broadcast.

They were lucky no one asked them about the schedule the WARN Act actually required or the number of jobs that the $55 billion sequester might actually take out of defense production. Some sharp reporting by Bloomberg and some skeptical analysis by a former OMB official at Washington's Stimson Center cast serious doubt on both the concocted schedule to send pink slip warnings just before the elections and about the real, significantly reduced, number of jobs that $55 billion less in Pentagon spending in 2013 would incur.

Nor did they get to what the budget sequester would actually mean to the Pentagon, if it occurs. According to the Congressional Budget Office (CBO), it would reduce Department of Defense "base" spending, not including additional war spending, to $469 billion. That amount, also according to CBO, would return the Pentagon to the 2006 level of spending, adjusted for inflation: Pentagon spending would be well above its average Cold War level (by about $35 billion above), and it would be as much as $100 billion above the low points after previous high spending periods, such as the Korea and Vietnam wars and the Reagan era.

This level of spending would compare to the defense budgets of China, Russia, Syria, North Korea, and Iran: It would be more than twice what they spend -- all of them combined -- and that does not include the additional war spending for the US already programmed for 2013.

It is particularly interesting that former Vice President Cheney came to Washington to complain about this level of spending. He was secretary of defense from 1989 to 1993; when he left that office, DOD spending was at almost exactly, in inflation adjusted dollars, the same amount that today he attacks.

There are problems with the sequester that is scheduled to occur against the Pentagon and other parts of the federal budget in January. The cuts would be abrupt, and -- according to some -- they might have to occur automatically across various selected accounts, perhaps even individual programs. But those are not the elements that the plaintiffs are primarily concerned about; it is the amount of money.

In fact, the sequester amount is historically generous. In 2006 no one was proclaiming they had to fire tens, even hundreds, of thousands because of "catastrophic" reductions; in fact, most were celebrating the increases.

To McKeon, Cheney, Lockheed, Panetta and the other hysterics, the data mean nothing, and the chasm between their rhetoric and the facts has become so gigantic that people in Washington are actually beginning to notice.

A version of this commentary was originally published, with different wording, at the website of Foreign Policy magazine.

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